Republican committee leaders optimistic budget will address priorities in education, Medicaid and the Indiana Department of Child Services

Legislators are up against an April 24 deadline, a date they set to end the General Assembly session, to get the budget for 2020-2021 finalized.

“We have to sit down and see the priorities of the caucus and the administration and see what we’re willing to cut out, basically,” said state Sen. Ryan Mishler, R-Bremen, chair of the State Budget Committee.

The recently released Senate version of the two-year budget, totaling $34.6 billion, took into account the possibility of a recession bringing lower revenues. The budget proposal would end the biennium with $2.2 billion in reserves.

“When we did our budget, I padded it pretty heavy in case this happened. In the Senate budget, we’ve got the reserves to have a cushion for something like this,” Mishler said.

“Our budget did include some of the priorities of the House and some of the governor’s. Once you start adding those in and take the $100 million hit (in needed cuts from the budget), how much cushion do you have for that? So, I think that’s what we’ll have to discuss,” Mishler said.

“We can work it out,” state Rep. Todd Huston, R-Fishers, said. “I think we’re going to fund the priorities that both caucuses have outlined and the administration has said are their priorities.” In an economic forecast Wednesday, fiscal analysts said the state would see a $31.2 million deficit, compared to previous projections, in 2020. Earlier projections, released in December, formed the basis for House and Senate proposed biennium budgets. On top of that, Medicaid funding need projections are $60 million higher than originally anticipated.

Tom Jackson, principal economist with IHS Markit, said economic growth in Indiana has remained steady with high-tech businesses thriving in some areas. But he noted that growth in employment might slow and housing starts are sluggish.

Despite a government shutdown earlier this year and many Hoosiers getting lower tax refunds than they’d expected, economic growth has remained steady in Indiana, Jackson said.

Affecting northern Indiana, the RV Industry Association has reported a decrease in wholesale shipments. There was a 15% drop in February from the same month a year before. In turn, manufacturers in northern Indiana have laid off some employees.

Asked whether declining RV sales signaled a coming recession, Jackson said, “No, I think some of it is really more related to the kind of leveling off that we’ve been expecting overall. Some of that can be be related to automation, but we don’t really see that as a red flag.”

Bolstered by strong corporate income tax collections, revenue coming into state coffers is on target, official said. Corporate tax revenues offset a drop in personal income tax revenues in the forecast.

Most legislators were optimistic about the forecast.

“I am pleased with the result of this revenue forecast, which is practically unchanged since the last report in December,” said state Sen. Karen Tallian, D-Ogden Dunes. “The numbers show that we will still have plenty of money to fully fund public education, teacher salaries and the Department of Child Services.

“The next few days will be spent in negotiations as we hope to get more Senate Democratic priorities in the budget as it is finalized,” added Tallian, who is a member of the Budget Committee.